KKR & Co., Inc. Q4 FY2024 earnings call

• Asset management: Raised $27 billion in Q4, with $114 billion raised in 2024 (second most active year). North America private equity fundraising ahead of expectations. 2024 was the 8th consecutive year returning more capital to North American private equity clients than called. - Wealth: AUM in K-Series vehicles at $18 billion as of Jan 1, 2025, with ~$100 billion AUM from individuals. - Monetizations: 2024 gross realized performance income $1.8 billion and realized investment income over $600 million, up over 40% year-over-year. - Deployment: Invested $84 billion in 2024, up from previous years. - Capital markets business: $270 million revenue in Q4, $1 billion in 2024. - Insurance: 100% ownership of Global Atlantic, with increased integration opportunities. - Strategic Holdings: Increasing stakes in 3 businesses by at least $2.1 billion, KKR investing $1.1 billion, expected to be fee-paying asset under management. Increased guidance for Strategic Holdings operating earnings: $350+ million in 2026, $700+ million in 2028, and $1.1+ billion in 2030.

For the fourth quarter of 2024, fee related earnings per share came in at $0.94, up 24% from the previous year and the second highest quarterly figure in KKR's history. Adjusted net income was $1.32 per share, up 32% year-over-year. For the year, fee related earnings per share (FRE) was $3.66, up 37%, and adjusted net income per share (ANI) was $4.70, up 38%, both record annual figures. Management fees in Q4 were $906 million, up 15% year-over-year. Total transaction and monitoring fees were $324 million, with capital markets transaction fees at $270 million. Fee related performance revenues were $25 million, leading to total fee related revenues of $1.3 billion, up 17% year-over-year. Expenses included fee related compensation at 17.5% of fee related revenues and other operating expenses of $192 million. Fee related earnings were $843 million or $0.94 per share with a FRE margin of 67%. Insurance operating earnings were $250 million and Strategic Holdings operating earnings were $8 million. Investing earnings saw realized performance income of $676 million and realized investment income of $110 million, totaling $786 million, up nearly 50% year-over-year. Investment performance: private equity portfolio flat in Q4 but up 14% for the year; opportunistic real estate in real assets up 1% Q4 and 4% year-over-year; infrastructure up 2% Q4 and 14% year-over-year; credit composites up 2% Q4 and 10%-12% year-over-year. Dividend increased from $0.70 to $0.74 per share, effective Q1 2025.

• Strategic Holdings: Increased guidance for operating earnings to $350+ million in 2026, $700+ million in 2028, and $1.1+ billion in 2030. - Asset management: Expecting management fee growth acceleration, with America's private equity first close expected in Q1 2025.

• Political, geopolitical, and inflation rates could impact conditions, which would affect the business outlook.

Q: On the investing outlook across the firm, with macros becoming more challenging, what is the investment outlook for 2025 relative to last year and sensitivity to macro trends?

A: Scott Nuttall stated the view hasn't changed, expecting an improved M&A environment in 2025, with volatility creating opportunities.

Q: Update on Americas fundraise and 2025 management fee growth?

A: Craig Larson mentioned America's private equity fundraising is ahead of expectations with a first close expected in Q1 2025. Robert Lewin noted management fee growth has been strong, expecting acceleration with good progress across the business.

Q: Walk through Strategic Holdings announcements, why now and ownership percentage?

A: Craig Larson said Strategic Holdings owns roughly 20% of core private equity businesses. Scott Nuttall added it's a good time as companies mature and partners are looking to get liquidity.

Q: Wealth management opportunity, where greatest opportunity?

A: Craig Larson discussed K-Series growth opportunity, with significant potential in mass affluent investors and strategic partnership with Capital Group. Robert Lewin noted distribution-related costs in other operating expenses but sees ROI from spend.

Q: Real Assets and Infra, impact of DeepSeek on prices and demand?

A: Craig Larson said innovation drives efficiency, demand for data center infrastructure is growing, with portfolio construction and location matters being key.

Q: Monetization environment in 2025?

A: Robert Lewin said monetizations are expected to be up in 2025 relative to 2024, with healthy portfolio and embedded gains.

Q: Asset-based finance platform progress and outlook?

A: Craig Larson said asset-based finance AUM is growing, with a massive market and high barriers to entry.

Q: Fundraising outlook, sustainability of drivers?

A: Scott Nuttall said fundraising drivers are sustainable, with more optimism and momentum, and flagship funds to be in the market more.

Q: Performance on Slide 10, flat quarter-over-quarter for traditional PE and public to private opportunities?

A: Craig Larson said broad indices don't tell the whole story, and Scott Nuttall mentioned public to private opportunities with dispersion and global reach.

Q: GA growth in adjusted book value and 2025 earnings run rate?

A: Robert Lewin said GA is evolving with longer-dated liabilities and private investments, expecting improved outcomes over time.

Q: Flagship private equity funds, investment period and fundraising for successors?

A: Craig Larson said there's a healthy pipeline, with funds like Infra and Climate still in the market, and Scott Nuttall noted sequencing of fundraising for various strategies.

Q: Monetization theme timing?

A: Robert Lewin said timing is fluid, but monetizations are expected to be up in 2025 with good visibility in high visibility revenue.